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As part of ongoing global discussion over a changing aid landscape, The Asia Foundation co-hosted a national seminar on “Aid, Investment and Accelerated Development in Timor-Leste,” in cooperation with the Overseas Development Institute (ODI) with support from the Australian Government. The seminar presented emerging research from ODI which explores how developing countries are navigating shifts in development assistance and the volatile nature of aid in fragile states. Read more about the seminar and opening remarks from General Secretary of the g7+ Secretariat, Helder da Costa.

Examining the Giving Instinct: Philanthropy in Vietnam

The streets of Vietnam’s biggest cities reveal unmistakable signs of wealth. Mercedes and Lexus luxury cars are common, and now and then, you can catch a glimpse of a Bentley or a Maybach gliding along the congested thoroughfares. Vietnamese “new rich” can now access the latest fashion and accessories in designer shops that line the corridors of the country’s expensive hotels.

Young couples stroll along Hanoi's Hoan Kiem Lake. In recent years, Vietnam's largest cities are showing greater signs of prosperity. Photo by Karl Grobl.

Conspicuous consumption may be much more visible now in the cities, but a visitor doesn’t have to look too hard or travel too far from the urban areas to see a very different economic reality that exists for most of Vietnam’s 89 million citizens.

Consistent high growth, averaging 7.3 percent this past decade, has brought about a significant drop in Vietnam’s poverty rate, from as high as 75 percent in the mid-1980s to 14.5 percent in 2008. However, these achievements are fragile: the ongoing global economic crisis and the demanding new challenges that a Vietnam in transition now faces – from a weak banking sector and an outdated education system to environmental degradation and a growing rural-urban divide – make it difficult to maintain this pace of growth. Moreover, high inflation and currency devaluation are undermining the poverty reduction effort, pushing many Vietnamese back under the poverty line in just the last few years. And, with Vietnam’s rise to lower-middle-income nation status in 2008, many international and bilateral donors are already announcing their departure to divert funding to lesser-developed regions.

Given the demands on the government’s budget and with decreasing foreign aid expected in the years to come, the long term resources needed to address many of Vietnam’s development challenges will have to also come from domestic sources. Vietnam has a long tradition of philanthropy and community assistance, reflected in such folk sayings as “Whole leaves wrap torn leaves.” But until now, there has not been any systematic research on domestic giving patterns and trends, mechanisms through which people and companies give, or what motivates giving. To help answer these questions, The Asia Foundation recently supported the Vietnam Asia-Pacific Economic Center in Ha Noi to carry out the first-ever assessment of philanthropic giving to identify strengths and weaknesses in current giving practices and inform policy recommendations to strengthen philanthropic giving, both in the business community and among the general public.

When asked, both urban and rural households showed a strong desire in charitable giving, at 51 and 73 percent, respectively. Of the different kinds of charitable giving, people give most to natural disasters, the poor, and religious charities. On average, households give the cash equivalent of roughly $40 a year, which is not an insubstantial sum given per capita income is slightly more than $1,000 a year, and considerably less in many parts of Vietnam, especially in rural areas. We can also see that the potential for increasing contribution is high. Seventy four percent of urban households and 89 percent of rural households said that their current level of contributions was modest, with some 90 percent of households in both urban and rural areas indicating that their contributions have no or only minor impact on the household economy.

Of the charitable contributions made, people by far prefer unofficial giving channels, particularly temples and churches, over official channels such as government agencies, mass organizations like the Fatherland Front, or the work place. In cities, only 37 percent of contributions went through official channels, while in the countryside, this figure drops to 10 percent. When asked why people give, the strongest reason was the desire to share the difficulties of others and the satisfaction received. Following the example set by neighbors is also a significant factor, especially in the countryside. Survey data consistently show that rural residents have stronger interest in giving and participating in charitable activities than their urban counterparts, while some 20 percent of urban residents expressed dissatisfaction with the effectiveness and transparency of charitable activities and the channels of giving currently available to them.

The business portion of the survey also yielded some surprising results, most notably the significant differences in charitable activities between the companies in Ha Noi and Ho Chi Minh City. At the time the survey was conducted, 66 percent of businesses in Ho Chi Minh City reported they were supporting at least one charitable activity, compared to only eight percent in Ha Noi. The level of giving is also markedly different: businesses in Ho Chi Minh City gave about eight times more than businesses in Ha Noi. In-depth interviews revealed that these differences reflect the higher dynamism of businesses in Ho Chi Minh City in advertising their brands and awareness of corporate social responsibility, as well as a longer-term vision of linking community development with private sector growth.

An additional reason may contribute to the difference in corporate philanthropy between Ha Noi and Ho Chi Minh City: only 32 percent of businesses in Ha Noi believed that charitable activities are effective, compared to 56 percent of businesses in Ho Chi Minh City. Businesses in both cities complained about a lack of transparency, openness, and confidence in how donations are used. Nevertheless, the business survey identifies great potential for increased corporate philanthropy. Seventy eight percent of businesses in Ho Chi Minh City and 55 percent in Ha Noi indicated that their contributions were low or moderate. Corporate success and corporate leadership are key determinants of the charitable activities a business undertakes, but preferential policies such as tax exemption play little or no role in business charitable contribution decisions. When asked about tax concessions for charitable giving, most business representatives were unclear about tax policies or doubtful of the benefits they may bring.

Over all, the research shows that corporate social responsibility is still very nascent in Vietnam and much can be done to increase awareness of philanthropy in the business sector. Despite that, the survey findings shed light on Vietnam’s tremendous capacity for giving in both the general population and the corporate sector – much-needed support to meet the development needs of the country. While the desire to give is high, there is also a great desire for more transparent and effective channels for giving, as well as more professional organizations capable of using the donations to truly reach those in need.

Kim N. B. Ninh is The Asia Foundation’s country representative in Vietnam. She can be reached at kninh@asiafound.org. The views and opinions expressed here are those of the individual author and not those of The Asia Foundation.